The Chapter 7 Discharge — Eliminate Debt & Move Forward

In Chapter 7 bankruptcy cases, “discharge” can be referred to:

  • the discharge (forgiveness) of debts like credit card and medical bills; and
  • the discharge (exit) from bankruptcy protection.

To find out what a Chapter 7 discharge could mean for you, fill out the below form to be connected with a bankruptcy lawyer.

Be sure to also check out the following information about the discharge of debts through Chapter 7 bankruptcy.

The Chapter 7 Discharge of Debts

Those who file under Chapter 7 of the U.S. Bankruptcy Code are eligible to receive a discharge of debts. This means that the court forgives these debts and Chapter 7 filers are no longer obligated to pay them—ever.

The types of debt that may be eliminated through filing Chapter 7 bankruptcy include:

  • Credit Card Bills;
  • Medical Bills;
  • Payday Loans;
  • Personal Loans;
  • Some Signature Loans;
  • Utility Bills; and
  • Back Rent.

Now, compare Chapter 7 bankruptcy to Chapter 13 bankruptcy, where bankruptcy petitioners must still pay their outstanding financial obligations but are given 3-5 years to repay those debts with the assistance of a repayment plan.

It’s important to keep in mind that some types of debt can’t be excused by the court during a Chapter 7 case, which includes:

  • Tax Debt: In most cases, filers must pay debts owed on taxes. Ask a bankruptcy lawyer about the exceptions to this rule.
  • Student Loans: Unless you can prove that paying your student loans would cause you “undue hardship”, they can’t be discharged in Chapter 7 bankruptcy.
  • Child Support & Alimony: Money owed to an ex-spouse for support is non-dischargeable.
  • Marital Debts: Debts you undertake in the course of a divorce or separation are not eligible for the Chapter 7 discharge.
  • Criminal/Legal Fines & Penalties: Any amount you owe as a criminal or legal obligation is non-dischargeable in bankruptcy court.
  • Certain Luxury Consumer Debt: The purchase of any luxury item costing more than $500 made within 90 days of your bankruptcy filing, as well as any cash advance totaling more than $750 taken on within 70 days of your bankruptcy filing, can’t be discharged.
  • Fraud/Intentional Torts: Any debt you took on under false pretenses is non-dischargeable. However, if you were the victim of lender’s fraud, you should ask a bankruptcy attorney to help you petition the court to allow the debt to be discharged.

Chapter 7 Discharge: The Exit from Bankruptcy

The other type of Chapter 7 discharge is the completion of the bankruptcy process and the exit from bankruptcy protection.

In order to receive your discharge in a timely manner, it’s important to follow the advice of your bankruptcy lawyer.

If you go by the books and refrain from concealing assets or taking on major debt at the last minute, you should be able to receive your discharge within 6 months of filing Chapter 7 bankruptcy. In fact, some filers find that it only takes them a few months to receive a discharge of their debts.

For a more detailed look at what you’ll need to do, take a look at the Chapter 7 timeline, which outlines the weekly requirements in a Chapter 7 case.